Conservative Liberal Democrat Coalition Where does this leave employment law?

While the most urgent issue facing the new Coalition Government is clearly reducing the deficit and continuing to ensure economic recovery, employment law is also on the agenda.

The coalition agreement between the Conservatives and the Liberal Democrats has been published amid mixed reactions from trade unions, human resources bodies, employer’s forums and business organisations that have varied views on what the implications will be for employment law.

The changes

In summary, some of the main employment law-related points to come out of the coalition agreement include:

• 1% rise in National Insurance to be partly scrapped
• Default retirement age to be phased out
• Immigration on immigration from outside the European Union to be capped
• The application in the UK of the European Working Time Directive will be limited

So what will this mean for employers?

The Federation of Small Businesses has welcomed the fact that both the Conservatives and Liberal Democrats have made compromises to safeguard business confidence. In particular, the reversal of the 1% increase in National Insurance Contributions will be an obvious benefit to employers.

On the other hand, the intended phased abolition of the Default Retirement Age can only increase the uncertainty in an already difficult area of law – we are sure that those of you who attended our employment law seminar last month will appreciate that even with the DRA, retirement is a tricky area. This will therefore be an area of the law to monitor closely to ensure that employers do not fall foul of age discrimination legislation.

The potential impact of the proposed cap on immigration is not yet clear but The Chartered Institute of Personnel and Development has called for consultation with employers regarding the cap, for fear that an arbitrary cap could leave many employers struggling to hire the talented performers they need to survive and thrive.

On a more positive note, the commitment to limit the application of the Working Time Directive is encouraging. While it is still unclear how much room for manoeuvre the Government will have, employers will surely welcome any limitations that can be implemented in order to maintain Britain’s flexible working market which served employers well during the recession.

We will be watching with interest how the new Government will tackle, amongst other things, the burden of employment legislation and we will continue to altert you to the latest developments.
This article was written by Lara Murray, a Solicitor in our Employment Team.